Chinese Drywall was the subject of conversation last week on the Legal Talk Network’s Lawyer2Laywer podcast.   The podcast, hosted by J. Craig Williams discussed “both sides of Chinese drywall litigation, the effects of Chinese drywall, the mounting lawsuits and what the future holds for the affected residents.”

Our own Scott Wolfe Jr. took part in the program, along with John Mullen, Sr. from the firm Nelson, Levine de Luca & Horst.

You can listen to the Podcast at the Laywer2Lawyer website here.  Or, download the MP3.

Or, listen to it by clicking on the below this link:

Chinese Drywall Litigation on Lawyer2Lawyer

As reported by the Wall Street Journal and other news agencies, Louisiana Senator Mary Landrieu has joined Florida Senator Bill Nelson to propose legislation “aimed at initiating a recall and imposing an immediate ban on defective building products from China.”  The bill is the latest effort by agencies and legislatures to address problems caused by imported drywall.

The bill – aptly titled the Drywall Safety Act of 2009 – is summarized in a press release from Mary Landrieu’s office as follows:

The centerpiece of their legislation is a resolution pressing the Consumer Product Safety Commission (CPSC) for a recall on Chinese-made drywall, based in part on findings by a Florida homebuilder and state officials who have confirmed the presence of sulfide gases in homes built with the drywall. The Nelson-Landrieu legislation also asks the CPSC to work with federal testing labs and the Environmental Protection Agency to determine the level of hazard posed by certain chemicals and as yet unidentified organic compounds in the drywall. In addition, the legislation calls on the commission to issue an interim ban on imports until it can review federal drywall safety standards to ensure that consumers are protected in the future.

Rather than regurgitate the news, however, we wanted to comment on two things exposed in Sen. Landrieu’s press release.

1. That behind Florida, Louisiana is the second largest recipient of Chinese Drywall.  This is a bit of a revealing fact for builders in Louisiana who were a bit unsure of how likely it was that they encountered imported drywall.    The press release confirms that “Louisiana has received 60.2 million pounds of imported Chinese drywall, and it may have been used in an estimated 7,000 homes in Louisiana.”
2. That the federal government is not only interested in aiding homeowners, but has builders on its mind as well.    Sen. Landrieu’s very quote strikes at the heart of contractors’ concerns, stating “”This defective Chinese drywall represents an attack on our homeowners, a defrauding of our homebuilders and another obstacle on our road to recovery.”    While the legislation doesn’t provide any specific relief for homebuilders, the press release seems to consider the homebuilders as victims to the contamination as well, and hope that the bill will “provide clarity to businesses in the construction and homebuilding sectors.”

Good news that homebuilders are not off the federal government’s radar, but cautious news as well – since the primary focus is on the homeowners, and the government is looking for a remedy that doesn’t burden the U.S. taxpayer.

Check out this video from a Florida new-station, who landed an interview with Florida Sen Nelson:

New Orleans’ Fox 8 has been reporting on the Chinese Drywall crisis as it’s appearing in Louisiana.   They recently turned the tables on the story, asking not about problems faced by homeowners, but those problems faced by builders, contractors, suppliers and other participants in the construction industry.

This has been a focus of Wolfe Law Group, who recently launched a practice group to advise and represent contractors and suppliers with regard to the Chinese Drywall crisis.   Fox’s Nancy Parker interviewed Scott Wolfe, Jr., partner at Wolfe Law Group, with respect to how contractors and suppliers are affected by the Chinese Drywall problem.

The story itself is here.  Here is a video from the newscast:

Lennar Co. used Chinese Drywall in the construction of some of its Florida homes. Now that the drywall is earmarked contaminated, and causing problems across the country, the nationwide builder has dealt with the problem with a one-two punch.

First, it is working to rebuild the affected homes. That’s right, rebuild them.  According to press releases, Lennar Company is removing and replacing contaminated drywall, and even paying the relocation expenses for customers while they are out of the home.

Second, to protect itself from future legal liability and to recover the expenses of its first move (above), it has filed suit against its suppliers and installers for the damages caused to them.

This proactive approach is perhaps one of the most aggressive responses to the Chinese Drywall situation from builders or suppliers.   And, arguably, it may be the best approach a company with Chinese Drywall exposure can take.

Lennar’s approach seemingly has the following positive affects for its company:

1. By repairing the contaminated homes, Lennar has fulfilled any of its warranty obligations;
2. The pro-active approach resulted in positive press for the company’;
3. By filing a lawsuit against its suppliers and installers, Lennar preserved its legal rights against those parties (read the 105 page complaint here);
4. Lennar has proof that it mitigated its damages after exposure to contamination liability.  The mitigation efforts will pay off in Lennar’s claims against its insurers, suppliers and installers.
5. Lennar has homeowners whose homes are repaired sign waivers to limit the company’s future exposure.

Of course, Lennar’s efforts are not without its critics.

InjuryBoard.com reported that some homeowners regret signing Lennar’s waiver because they were not completely compensated for damages.   Further, in response to Lennar’s suit against Knauf, the supplier released a statement complaining that it only supplied approximately 20% of the drywall at controversy – yet is the only company sued.

The Chinese Drywall situation is clearly a bad situation…and any company involved must simply perform damage control.   Lennar Company is one of the first to aggressively protect themselves – legally, publicly, and practically.   It serves as a very fair example of how some companies involved with the contamination may approach the controversy.

As part of Lennar’s PR campaign, they recently spoke out about their response to finding Chinese Drywall contamination.  The video is reproduced below.